JUDGMENT : T.S. SIVAGNANAM, J (Prayer: Writ Appeal filed under Clause 15 of Letters Patent to set aside the order, dated 08.07.2019, passed in Rev.Apl.W.(MD) No.57 of 2019 in W.P.(MD) No.3852 of 2019, on the file of this Court.) 1. This writ appeal by the REPCO Bank is directed against the order dated 08.07.2019, passed in Rev.Apl.W.(MD) No.57 of 2019 in W.P.(MD) No. 3852 of 2019, filed by the respondent herein. 2. For the sake of convenience, the parties shall be referred to as the “appellant – Bank” and “petitioner” respectively. 3. The petitioner filed the writ petition praying for issuance of a writ of certiorarified mandamus to quash the communication issued by the appellant – Bank, dated 04.02.2019, informing him that his father Late.Sri.A.Pazhanivel had made five fixed deposits in the Bank and appointed the petitioner as a nominee. The details of the account, amount, date of deposit and date of maturity were also given. Further, the petitioner was informed that his father was the guarantor / co-borrower in respect of five loan accounts and that a general lien has been marked by the Bank over the fixed deposits of the petitioner's father for the loan accounts, wherein he was the borrower / co-borrower and guarantor. The petitioner was informed that the loan account SDL No.45, wherein his father was the guarantor, has become an NPA (Non Performing Asset) and for the said loan, a sum of Rs.6,01,890/- including interest and others upto 31.01.2019 and further interest from 01.02.2019 is to be paid for the closure of the loan account. Therefore, the petitioner, as a nominee mentioned in the fixed deposits, was advised to close the loan account SDL No.45 immediately, or else, the loan account will be closed by appropriating the amount from the fixed deposits, if the loan account is not closed within fifteen days. 4. The petitioner challenged the above communication by contending that the loan account SDL No.45 having become NPA and the appellant – Bank having initiated proceedings under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short, SARFAESI Act) and taken steps to bring the mortgaged property for auction, cannot issue the impugned communication, more particularly, when the borrower had paid a sum of Rs.1,00,000/-. Further, the other borrower, namely, Rajeswaran has given a representation requesting the appellant – Bank not to deduct the loan amount from the account of the petitioner's father, thereby meaning that he will settle the outstanding and should not be adjusted from the deposits maintained by the appellant's father. Further, it was contended that the provisions of Section 171 of the Indian Contract Act are not applicable for the reason that the main borrowers are discharging the loan amount and there is sufficient property of the borrowers securing the loan transaction, which are under the control of the appellant – Bank. 5. The writ petition was initially disposed of by order dated 25.03.2019, with an observation that under the guise of enforcing the banker's lien under Section 171 of the Contract Act, the appellant – Bank is not justified in retaining all the fixed deposit amounts and the Court directed the appellant – Bank to pay the balance amount after adjusting the over all loan liability. In these terms, the writ petition was allowed. 6. The petitioner filed a review petition stating that the Court had only directed retention and the expression “adjustment” was to mean “retention” only and the appellant – Bank cannot appropriate the same towards the loan account. The review application was disposed of by stating that “adjustment” would only mean “retention” and not “appropriation” and whether the liability of the petitioner's father would actually come to Rs.13,08,000/- or not is the matter to be thrashed out in independent proceedings. Aggrieved by the same, the appellant – Bank is before this Court by way of this appeal. 7. We have elaborately heard Mr.Pala Ramasamy, learned counsel appearing for the appellant – Bank and Mr.S.Malaikani, learned counsel appearing for the respondent – petitioner. 8. Before we examine the facts of the case, we need to consider as to what is the right, which is exercisable by the appellant – Bank on the fixed deposits whether it is a banker's lien as mentioned by the learned Writ Court in its order dated 25.03.2019. This issue is no longer res integra. 8. Before we examine the facts of the case, we need to consider as to what is the right, which is exercisable by the appellant – Bank on the fixed deposits whether it is a banker's lien as mentioned by the learned Writ Court in its order dated 25.03.2019. This issue is no longer res integra. It was held in Punjab National Bank and others vs. Surendra Prasad Sinha [ AIR 1992 SC 1815 ] that under the terms of contract with the Bank, the Bank is entitled to appropriate the debt due by adjusting the security in their possession and credit the balance amount of the borrower. 9. A decision of the High Court of Madhya Pradesh, namely, State Bank of India vs. Madhya Pradesh Iron & Steel Works Pvt. Ltd., Raipur and others [(1999) 95 Company Cases 879 (MP)] is closer to the facts of the case on hand. The facts of the said case were that the District Courtin a civil suit rejected an application filed under Section 151 C.P.C., wherein it was prayed that the applicant be permitted to adjust Rs.10,00,000/- deposited in the current account of non-applicant or be permitted to retain the same as security for the suit claim on the basis of “Banker's Lien” or the amount be ordered to be deposited in the Court till it passes an appropriate order for its disposal at the time of passing the decree in the suit. In the said decision, while deciding the effect of banker's lien under Section 171 of the Indian Contract Act qua the deposits made to the Bank, it was held as follows: “It was further held that there was no Hen. The counterclaim was decreed. In revision, Puranik, J. held that even though Section 171 of the Contract Act did not apply in terms as there could be no bailment of deposits made to a Bank, the right of Banker to claim lien could be justified. It was held that the Contract Act was not a complete Code in itself and Section 1 of the Contract Act itself saved any usage or custom of trade. Relying on Irrawaddy Flotille Co. v. Bhagwandas, (1891) 18 Ind App 121, Jwaladutt v. R. Pillani, AIR 1929 PC 132 and Kalyanji Kuwarji v. Tikaram Sevlal, AIR 1938 Nag 254, it was held that Contract Act was not exhaustive. Relying on Irrawaddy Flotille Co. v. Bhagwandas, (1891) 18 Ind App 121, Jwaladutt v. R. Pillani, AIR 1929 PC 132 and Kalyanji Kuwarji v. Tikaram Sevlal, AIR 1938 Nag 254, it was held that Contract Act was not exhaustive. It was held that in view of Section 6 of Central Provinces Act, the rules of justice, equity and good conscience applied where Contract Act was not applicable in terms. The principles of English Law could be adopted as principles of justice, equity and good conscience, if they suited Indian conditions. The learned Judge referred to Khan Bahadur Mehrban v. Makhna, AIR 1930 PC 142 and Waghela Rajsanji v. Shekh Meeludin, (1887) ILR 11 Bom 551 as examples where the principles of English Law were made applicable. Thus, applying the principles of English Law in Union Bank of Australia Ltd. v. Murray Aynslay, 1898 AC 693, that in that particular case, the plaintiff was entitled to "retain the moneys of the defendant and had even rights to combine the two accounts)" The argument-- 'no custom or usage of trade' was pleaded or proved, was repelled by Puranik, J., on the ground that banking business in India was carried on the same lines as was carried in England and Bankers in India are governed by the same rules as that are followed in England. 16. It appears that Puranik, J., rightly held that Section 171 of the Contract Act in terms did not apply to cases of deposit of money. In case of deposit no relationship of bailor and bailee is established in accordance with Section 148 of the Contract Act. The items of money deposited with a Bank do not retain their identity unless they are set apart or earmarked under special terms of contract. They are normally not held in specie. Since the relationship of debtor and creditor is established between a Bank and a depositor, the money-in-deposit in the Bank legitimately belongs to the Bank. It has the right of ownership of particular items of money deposited. It can utilize that money for its own purpose. Under the contract of deposit, the Bank is required to refund us equivalent as per terms. Lien in the context would be a right of retention of goods of the debtor in the hands of creditor until the debt is repaid. A Bank cannot claim lien on the money that belongs to it. Under the contract of deposit, the Bank is required to refund us equivalent as per terms. Lien in the context would be a right of retention of goods of the debtor in the hands of creditor until the debt is repaid. A Bank cannot claim lien on the money that belongs to it. Therefore, application of Section 171 at the Contract Act should be properly confined to cases where the papers, securities and oilier goods belonging to a debtor, are kept with the Bank for creating relationship of bailor and bailee. Puranik, J.. was clearly right in holding that the Contract Act was not a complete Code and the Banking business, which was imported to India from England in its modern form, was governed by usages and customs of Banking business in England. However, the learned Judge has called right to retain or combine the two deposits as Banker's Men. It is now recognized in England as well as in India that it would be a misnomer to call the right of a Banker to hold money-in-deposit towards the payment of debt or to combine two accounts of a depositor as Banker's lien. It should be properly called right of set-off or right of adjustment. It has been loosely called as Banker's lien in England as well as in India. However, the practical effect in either case should not be much different.” 10. The Court also referred to the decision in the case of Punjab National Bank Ltd. vs. Arura Mal Durga Das [ AIR 1960 P&H 632 ], wherein it was held as follows: "Strictly speaking the use of the word 'lien' in relation to money -- though frequently used, is not correct. It is confined to securities and property in Bank's custody. A distinction is drawn between a Banker's lien on its clients, paper, goods and security etc. and the Bank's right to set-off deposits against debts due to it from its depositors. It may arise from the contract, or from mereantile usages or by operations of law. Hart (Law of Banking, 3rd. edition, page 810) cited with approval the following from the treatise of Mcrse on the American Law of Banking : "The word 'lien' cannot properly be used in reference to the claim of the bank upon a general deposit, for the funds on general deposit are the property of the bank itself. Hart (Law of Banking, 3rd. edition, page 810) cited with approval the following from the treatise of Mcrse on the American Law of Banking : "The word 'lien' cannot properly be used in reference to the claim of the bank upon a general deposit, for the funds on general deposit are the property of the bank itself. The term 'set-off should be applied in such cases and lien when a claim against paper or valuation on special or specific deposit is referred to. In the eases the words are used very loosely.......The practical effect of lien and set-off is much the same." 11. The Court also referred to the Judgment of Lord Denning in Master of Rolla in Halesowen Presswork and Assemblies Ltd., vs. Westminister Bank Ltd., [ (1970) 3 WLR 625 ], wherein it was held as follows: "Seeing that the banker's lien is no true lien, in order to avoid confusion. I think we should discard the use of the word "lien" in this context and speak simply of a banker's right to combine accounts" : or a right to "set-off one account against the other. Using this phraseology, the question in this case is : suppose a customer has one account in credit and another in debit. Has the banker a right to combine the two accounts. So that he can set-off the debit against the credit, and be liable only for the balance? The answer to this question is : Yes, the banker has a right to combine the two accounts whenever he pleases, and to set-off one against the other, unless he has made some agreement, express or implied, to keep them separate. This principle was stated and applied in two cases decided on the same day-- November 8, 1872. One was in re European Bank, Agra Bank Claim's case. 1872 LR 8 Ch App 41, in the Court of Appeal in Chancery. The other was Garnett v. Mckewan. (1872) LR 8 Exch 10 in the Court of Exchequer II has been applied several times since, such as T. and H. Greenwood Teale v. William Williams. Brown and Co.. (1894) 11 TLR 56 and in re Keever ( A Bankrupt), 1967 Ch 182. The other was Garnett v. Mckewan. (1872) LR 8 Exch 10 in the Court of Exchequer II has been applied several times since, such as T. and H. Greenwood Teale v. William Williams. Brown and Co.. (1894) 11 TLR 56 and in re Keever ( A Bankrupt), 1967 Ch 182. Conversely, the customer has a right to call on the banker to combine the two accounts, and to setoff one against the other unless there is some agreement, express or implied, to the contrary : see Mutton v. Peat, (1900) 2 Ch 79." 12. The Court also took note of the decision of the Honourable Supreme Court in Surendra Prasad Sinha's case (supra), recognising the right of the banker to adjust the amount in fixed deposit of Bank on its maturity towards debt owed by the two sureties to the Bank under a guarantee to repay the debt of the principal debtor in case the debt is not repaid by him, when the F.D.Rs., were furnished as security for repayment of debt by the two sureties. The operative portion of the Judgment reads as follows: "...... .It is not obligatory to file a suit to recover the debt. It is settled law that the creditor would be entitled to adjust, from the payment of a sum by a debtor, towards the time barred debt. It is also equally settled law that the creditor when he is in possession of an adequate security, the debt due could be adjusted from the security in his possession and custody. Undoubtedly, the respondent and his wife stood guarantors to the principal debtor, jointly executed the security bond and entrusted the F.D.R. as security to adjust the outstanding debt from it at maturity. Therefore, though the remedy to recover the debt from the principal debtor is barred by limitation, the liability still subsists. In terms of the contract the Bank is entitled to appropriate the debt due and credit the balance amount to the saving bank account of the respondent........" 13. In Indian Bank, Rasipuram vs. Sri Annapoorna Finance, Rasipuram [AIR 2002 Madras 180], it has been held that for exercising the right of set-off there should exist mutual demand between the Bank and the customer. 14. In Indian Bank, Rasipuram vs. Sri Annapoorna Finance, Rasipuram [AIR 2002 Madras 180], it has been held that for exercising the right of set-off there should exist mutual demand between the Bank and the customer. 14. In the light of the above legal position, the petitioner is not justified in contending that the appellant – Bank can only retain a portion of the amount to cover the outstanding loan and cannot make adjustment. As pointed out in the afore-mentioned decisions, the expression “banker's lien” is in effect a misnomer as the nature of transaction between the petitioner's father, who was a borrower / co-borrower / guarantor, would clearly show that the right, which is now exercised by the appellant – Bank, is a right to set-off by combining the various accounts. 15. In the light of the said legal position, the argument made on behalf of the petitioner that the appellant – Bank should not proceed against him, because the other co-borrower is ready and willing to pay the amount, is an argument, which is not acceptable. The law is well settled that it is for the secured creditor to proceed for recovery in the manner decided by them and the borrower or persons claiming under the borrower cannot dictate as to the order in which recovery has to be effected i.e., first action should be taken to recover the loan from the borrower and only if it is not possible to recover from the guarantor. This procedure is not required to be followed and it is for the secured creditor to proceed in the manner known to law bearing in mind the best interest of the Institution. 16. The learned counsel for the petitioner would further contend that no action was initiated by the appellant – Bank under the provisions of the SARFAESI in respect of the other loan accounts and in such circumstances, the petitioner cannot seek any remedy before the Debts Recovery Tribunal. 17. In this matter, we are concerned about the validity of the communication sent by the appellant – Bank to the petitioner, dated 04.02.2019. The facts stated therein have not been disputed by the petitioner. 17. In this matter, we are concerned about the validity of the communication sent by the appellant – Bank to the petitioner, dated 04.02.2019. The facts stated therein have not been disputed by the petitioner. Thus, having held that the appellant – Bank is entitled to a right of set-off, if the petitioner fails to avail the opportunity given by the appellant – Bank in the communication dated 04.02.2019 by closing the loan account SDL No.45, within the time permitted, then it would be legally permissible for the appellant – Bank to set-off the outstanding by adjusting the amounts available in the fixed deposits. 18. In the result, the writ appeal is allowed and the order dated 08.07.2019, passed in Rev.Apl.W.(MD) No.57 of 2019 as well as the order dated 25.03.2019 passed in W.P.(MD) No.3852 of 2019 are set aside and consequently, W.P.(MD) No.3852 of 2019 is dismissed. The respondent – petitioner is granted fifteen days time from the date of receipt of a copy of this Judgment to close the loan account SDL No.45 as offered by the appellant – Bank in the communication dated 04.02.2019, failing which, the appellant – Bank will be entitled to appropriate the amount available in the fixed deposits for the purpose of closing the said loan account. No costs. Consequently, connected miscellaneous petition is closed.